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The Year Ahead: 2011 Predictions for China

Growth and Its Challenges Lie Ahead for World's Second-Largest Economy

It's officially the New Year. What now? Well, the economy might be brightening, but we're not in the clear yet. Ad Age took the pulse of top executives in the major industry sectors to compile this preview. See sidebar for more predictions.

Don't expect to hear conversations about budget cuts and belt-tightening in China. The global economic crisis has largely spared the mainland's economy, thanks to government stimulus policies to spur domestic consumption. The challenge facing multinational marketers and ad agencies in China this year is coping with fast-paced growth, particularly in digital media.

The industry needs "to orient ourselves for a digital future, an era of consumer empowerment and community-driven relationships with brands," said Tom Doctoroff in Shanghai, JWT's China CEO and area director for northeast Asia.

That's true everywhere, but the stakes are higher in China, now the world's second-largest economy. China has 518 million internet users, 117 million broadband households and 850 million mobile phone subscribers, including over 38 million 3G users.

Advertisers spent about $3.7 billion on internet ads in China last year, according to eMarketer, up 37% from $2.7 billion in 2009. By 2014, online advertising spending in China is expected to reach $9.5 billion.

In China, digital advertising is also a matter of practicality. Reaching a national audience through China Central Television is not only pricey, it's pointless. Two-thirds of China's 1.2 billion people are still too poor to buy a new car or even a can of soda from multinational marketers. But the remaining one-third -- whether they are middle class or nouveau riche -- have a cellphone, access to a PC and online accounts with leading Chinese tech companies like Tencent, owner of the QQ.com social-media platform, and search giant Baidu.

Marketers, however, are still struggling with the best way to tap digital media to build brands. "It's not easy to get appropriate talent," said Dick van Motman, DDB's CEO-president for Greater China in Shanghai.